by Deb Cupples | Here our nation sits, poised to spend up to $1 Trillion (about 10% of our national debt, about 33% of our nation's annual budget) to bail out Wall Street firms and financial institutions whose executives pocketed tons of cash while taking stupid risks -- schemes largely enabled by the Bush Administration's anti-regulation ideology (via Memeorandum).
In short, these are serious times. Let me state from the outset: I plan to vote for Barack Obama -- not because I have full faith or trust in him, but because I think he's a safer dice roll than John McCain.
That said, I feel uncomfy about an article in yesterday's Washington Post, which said that Sen. Obama has been misleadingly spinning McCain's record on Wall Street regulation. The Post states:
"On the campaign trail in 2000, he [McCain] touted his record of voting 'for smaller government, for less regulation.'
"However, when it comes to regulating financial institutions and corporate misconduct, Mr. McCain's record is more in keeping with his current rhetoric. In the aftermath of the Enron collapse and other accounting scandals, he was a leader, with Sen. Carl M. Levin (D-Mich), in pushing to require that companies treat stock options granted to employees as expenses on their balance sheets. "I have long opposed unnecessary regulation of business activity, mindful that the heavy hand of government can discourage innovation," he wrote in a July 2002 op-ed in the New York Times. "But in the current climate only a restoration of the system of checks and balances that once protected the American investor -- and that has seriously deteriorated over the past 10 years -- can restore the confidence that makes financial markets work." (WaPo)
That makes sense. Expensing stock options is difficult but crucial. When executives refuse to expense them, their companies appear to be worth more than they really are. That's good for execs who get huge stock options, because they can sell their stocks at higher prices; it's bad for ordinary investors, because they end up duped into buying those stocks for more than they're worth.
As far as I know, our government still does not require public companies to expense stock options. The Post continued:
"Mr. McCain was an early voice calling for the resignation of Securities and Exchange Commission Chairman Harvey Pitt, charging that he "seems to prefer industry self-policing to necessary lawmaking. Government's demands for corporate accountability are only credible if government executives are held accountable as well." (WaPo)
Our corporate-friendly ex-SEC chairman Harvey Pitt was a big issue. Mr. Pitt opposed reforms
that would have protected ordinary investors. That's no surprise,
because Mr. Pitt (as a very expensive, private lawyer) had represented
big accounting firms and brokerage houses.
Mr. Pitt took office, proclaiming that he would make the SEC a "kinder and gentler place for everyone." Looking back on his 15 months at the SEC, Mr. Pitt apparently meant "kinder and gentler" for corporate execs and the accounting firms that helped them get rich by duping us ordinary investors.
While the Bush Administration praised Mr. Pitt, sometimes in unrealistically glowing terms, McCain was right to criticize Pitt. The Post continued:
"In 2006, he pushed for stronger regulation of Fannie Mae and Freddie Mac -- while Mr. Obama was notably silent. 'If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole,' Mr. McCain warned at the time." (WaPo)
I don't need to comment on Fannie and Freddie: obviously, given that the companies are now under a government conservatorship, there should have been more oversight -- as McCain suggested two years ago.
In short, John McCain's record is certainly not identical to President Bush's.
I'm not saying that McCain was or is the incredible Moderate Maverick that he claims to be. But his record on corporate regulation doesn't seem to be anywhere near as bad as Obama makes out.
Right now, Sen. Obama is saying all the right things about sensible regulation of various market and corporate players. But he wasn't singing that tune three months ago -- though three months ago (to anyone paying attention) there certainly was loads of cause to be concerned about regulatory failures.
Instead, three months ago, Obama was proclaiming love for "free market" principles: the inaptly named ideology that actually means "anti-regulation," an ideology that is largely responsible for the economic dire straits we find our nation facing today.
I certainly don't mean to suggest that Obama is worse than McCain. Frankly, I don't know where Obama is, because he's been all over the map.
My point is this: Obama has legitimate points to make about McCain, and it would be better for Obama's image if he would hammer those points home while refraining from following Karl Rove's example and twisting/exaggerating McCain's record.
Other Buck Naked Politics Posts:
* AIG's $85 Billion Bailout: See What Anti-Regulation Ideology can Do?
* Lehman Brothers Bankruptcy: What it Might Not Mean
* Obama Loves the So-Called "Free Market": Oh, Dear
* Obama Pummels McCain on Economic Policy
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